good morning, everybody. i'm becky quick along with joe kernen. andrew ross sorkin is reporting from beautiful new england this morning where business leaders and thinkers are gathering for the nantucket project. that's why we're playing "sail away." among newsmakers joining us today we have bob diamond, alan schwartz. the sfeet has votes scheduled today on legislation to avert a government shutdown. the measure is expected to pass. it does not include house language that would strip money from obama care. house republican leaders have said they are unwilling to sell the bill. a national congressional debate is expected to -- into the weekend. we have personal income and

spending. then consumer sentiment. we will hear from bill dudley along with eric rosengren. est, esther george told an audience the size of the michelle taper may not matter all that much. she argues that the key thing is the clarity with which the fed communicates about where its policies are heading. maybe not surprising, 10 billion, 15 billion, as long as they get it started, that's what the market will be watching. >> say something yesterday, becky, that someone predicted it will be next year and it will be the next chairperson in the fed that starts the tapering. did you see that? >> there's only two meetings left. it was october and december, you're right. is bernanke going to on be in a position where he did it -- >> someone said it yesterday, itself his prediction is that nothing happens until there's a new fed person. >> because they tied it to economic conditions, i think it would be difficult to say that

economic conditions have changed all that drastically in a month or two. >> you know a week from today is, again, an unemployment report. >> we're back to jobs friday again. >> aren't we in a week? isn't it october -- >> you're right. time is flying. >> it is going a 30-day september, right? >> october 1st is -- >> andrew is the calendar guy. we'll talk to him in a moment and confirm next week is october. >> true. in korcht news, jcpenney announcing a public offering of up to $96.6 million shares. the move will massively dilute current shareholders is what -- why the stock was weak yesterday. the retailer didn't disclose the price in which it plans to sell the shares. fortunately when you're, you know, either rumored to be selling or then actually

confirming it, and you were going to sell it for less than expected. another embattled company in the news this morning, blackberry. they will post quarterly results at about 7:00 eastern, but it canceled its conference call. >> what? are you kidding me? >> yeah. there could be a lot of different reasons. this doesn't necessarily -- it doesn't necessarily mean that just leave us alone. you know? yesterday sprint said it's going to take a wait and see approach on blackberry. not immediately following what t-mobile did with its smaller rival. you know we talked about this yesterday. t-mobile announced it no longer plans to stock blackberrys in its stores. >> in the stores, yeah. online, you can still buy it. >> you can? >> i'm holding on to that. >> i was kidding yesterday when i said they're going to turn off your phone some day. >> i don't know. they're not planning on making

conzoomer surprises any more. >> they run all the servers that carry the messages. >> yeah. there's still u.s. government -- >> really? >> yeah. the u.s. government still uses them. >> if we shut down the u.s. government, then they can shut down -- october. think about what's happening in october. >> okay. >> obama care, did you see the journal? and then the individual and the government shutdown and all the previous -- but you've got all the previous crash anniversaries in october, too. the 17th, 19th. and they're all -- i don't know. it's a cool month. alibaba, the top shareholders are backing the company's corporate issue. trade over whether the commerce e the-giant. they failed to convince regulators which would need to

wave listing rules. this could mean the ipo will happen in the u.s. instead of over there. >> in some other stock news, as well, mikey posting better-than-expected earnings after the close. this is a newly minted dow component. enjoy big games in north american to fewer rivals. that is an all-time high for nike. >> nice. and that's going to add some nice points. is the dow indicated higher this morning? it must be, huh? >> it's not going to be enough. >> futures are down. >> it's amazing. >> you look at google yesterday? >> no. >> it's the 15th anniversary and they got like a birthday cake. it's not about somebody else. it's not someone else's 192nd anniversary of the person that designed some pendulum that figured out how the earth rotates. >> it's cute. >> yeah, it's kind of cute.

they're cute figures there. they have the eyes. ow, you can hit -- that's cute. you can mac it hit the pinata when you do that. an i.t. and management consulting, the company says it is too early to say if the fourth quarter of accenture is growing with its consulting business, if that's sustainable. it's raising its cash dividend by 60%. it's announcing a $5 billion buyback. joe, listen you, smithfield foods has completed its sales to a chinese company. it is the largest company, valued at about $1.7 million. we knew this was happening and thou it is official. >> yeah. asleep on the job. remember when the montgomery

inn -- those people are from canada. >> really. >> yeah. they're good. >> so would dodge that -- >> yeah, yeah. >> the debate. i miss andrew for this reason. well, for a lot of reasons. >> he's with me. >> oh, he is? >> i'm right here. i'm right here. >> hey, partner. >> i know it. i know it. >> did you see "the wall street journal's" lead editorial? >> i did. i did. >> this is because he didn't toe the line. i'm barely a democrat. remember when he said that? and then you add in that it's wamu and bear stearns, which they were arm twisted to buy in the first place and it's unbelievable. >> jamie dimon is on the cover of all the newspapers today. a meeting with eric holder in washington yesterday. the two are said to have discussed a multibillion dollar mortgage settlement. they turn down three. support verse reportedly urged

the bank to raise its offer now they're saying of a $7 billion fine. and then add in $4 billion in relief for struggling homeowners and that would add up to $111 billion, which the bank okayed, sorkin, right? but is this punitive? tell us what you really think. >> i really think we're almost at extortion levels. i don't get it. i'm saying it right here. i can't imagine what's going on. and when you look at the numbers, they don't make any sense any more. now we're in totally punitive territory. i don't know if it's political. i think it's the way he approached the regulators and all the credibility that seemed to get lost during the london whale and now the opportunity that seems to be on the table and the public angst. >> makeup looks good today, doesn't it? you look good today. >> thank you.

>> it's either the lighting or the -- >> there's a whole team of people. oh, here it is, sorkin's sweater of the month. >> but you have a look around your eyes and stuff. it's very appealing. >> it's sort of the oprah battle ra walters things they do. there's a little vaseline on the lens. >> and we also needed you earlier about -- you're the calendar guy from yesterday. >> i am. >> you could be a calendar guy, but i meant the calendar -- it's jobs friday next friday. >> next friday is the day. so we can start picking numbers now if you'd like. >> because we were talking about maybe they don't taper until there's a new fed chairperson in there. and i say chairperson because we know who it is probably going to be. >> i'm going to give you a little tease because i have a lot to talk about today here in nantucket. and i should tell you that i saw our good friend larry summers drop named at david rubin stein's house.

a lot of people here for the program. there's a lot of interesting tidbits that i picked up. >> what did larry have to say? >> i wanted larry - here in nantucket. my yacht is right over there behind us. >> we're going to believe you. >> i know. >> is it a yacht big enough for your helicopter to land on? >> the landing pad is -- they have one of those. >> they do. >> you know who is also here, by the way? >> who? >> ee's not here, but kenny victor is up transporting all kinds of people back and forth for this whole thing. it's sponsored up the ga zoo. i'm drinking nantucket nectars. >> did larry say anything to you, you're standing in my way or -- >> no. he said thank you. >> did he know we were backing

him? >> he does. he does. and i think the issue about coming on this morning or frankly coming on tv at all rye now snae feels uncomfortable given sort of what's in the mix. i think we will see larry. he's waiting for the next person to make their way. bob diamond will be on. >> did he send us that shot? if i ever need a shot of me, i'm going to send one like that. the collar is up. >> he looks so dapper, right? and british. very british. so he is going to be here and we're going to talk about -- get an op-ed in the financial times two weeks ago. talked to him last night well alan swartz coming up in the

8:00 hour. did did a thang, people were approaching in all different ways last night in debating what the solutions were. he spent a lot more time talking about the problem than the solution. >> even mayor bloomberg made a comment the other day about the bellagio saying you're too focused on equal outcomes. you have to focus on equal opportunity. then it all works out. someone asked bill gates, why did you do control alt delete? he said oh, all right, it was a mistake. >> it was a great line. i told david he has a career in interviewing people. >> i think he might. >> flower line of work if he ever wants to give up on the

other stuff. but what is cool about david's house is he collects all these famous documents. pretty neat. >> this nantucket conference attracting the likes of larry summers, andrew ross sorkin, gorbachev, pope francis. >> not pope francis. >> i swear it started out with gore bachev and i'm andrew ross sorkin. i'm like, is there another -- >> it was a mistake. >> no. >> it was a mistake. but no, there's a lot of interesting people here. we talked to meredith whitney. and, of course, that is by the way the discussion here. and most people feel a little bit around about this extortion thing.

but i will say one thing to point out, $20 billion, that's actually what jpmorgan has spent on legal fines between 2010 and 2012. >> 20 million? >> $20 billion in total. if this $11 billion minimum goes through, it will be $20 billion in total. while there's a lot ooh people here who are thinks friends and his supporters, a lot of people say at some point if you're the board, this gets very complicated. and perhaps the reason he still has his job is the fact that there isn't anybody waiting in the wings. >> the classic thing is, the government, which was so worried about the whale somehow hurting depositors or shareholders because it was 5 billion, they're cracking on 20 billion. they don't seem to beered worried about the shareholders and the depositors with the extorting -- that's your word. >> it's my word. >> we're late somehow. >> sorry. i'll see you after the break. >> again, andrew is in

nantucket. he's going be reporting there live throughout the morning. right now, it's time for the global markets report. karen tso is standing by in london. good morning. >> good morning, becky. a bit too much politics for investors across these markets. there is prod based selling across these markets. we have the the government shutdown in the states. this has caused investors to be somewhat -- in europe. but adding that we might be more concerned about functions across the periphery. this is a typical eurozone story. and it seems as though the threats that the coalition in italy might break down. the former prime minister was tossed out of. we switch over charts to the individual indices, you can see particularly in the italian market, this is softer today, but the selling has accelerated throughout the morning session. now to is the 0.8%.

basic resources is seeing some of the selling, but also some of those peripheral bank stocks, as well. let me show you what's playing out on government debt markets. treasuries, 2.63%. and a credit default stock market could rise to its highest level in four months. the italian market has been interesting today. we had a debt auction out there. slight pick up in action because of this. the cdf market is spinning at the most, a five-year credit default has risen to the highest level since july. this is how it plays. the twos, creeping towards that 3% mark on italy. >> let me send it back to you, becky and joe.

>> karen, thank you very much. markets avoiding a six-day losing streak. ended modestly higher yesterday. about 535 points. joining us now is chris johnon, director of research at jk investment group. yesterday, chris, i'll tell you something i was thinking was i felt like we had really had a poor showing after that first day with -- when they didn't taper. it's like wow, why would stocks ever go up again given that we had our good news about no taper and we can't expect earnings, really, to be that great with this economy. but they did manage to close higher. but we're still off the highs. >> yeah. >> for me, it's kind of rung out some of my positive feelings and we're still at pretty high levels. so maybe it's doing what it's supposed to do. is the market setting itself up for another leg up or do you think we've got this correction finally in the works? >> no, i think we familiar into that correction territory. >> you do? >> yeah. if you look at it, the marker,

even though it did find its way to get back up to those highs again. it's on a fewer number of stocks. if you compare it to the highs we saw earlier this summer. so it's a technically tired market. and when you combine the fact that we're heading into the earnings season, we've seen the expectations be halved since last earnings season. but again, look out into december and fourth quarter and you still have expectations that are up in the 10%, 11% range. companies are going to have to start reigning those in. i don't think we're going to see that growth here despite whatever cuts we said in between the lines. so yeah, i think we're setting up for that weakness, that seasonal october volatility. but i think it's going to be a buying opportunity as we head into that powerful, seasonal period of the year, october, november, december. >> sometimes it's good when the expectations come down before the actual numbers come out, right? >> right. absolutely. it's like sending your kid off to school and saying, hey, i'm going to be happy if you get fs or ds and when they bring home

bs or cs, you're going to go out and celebrate. this is one of those things where expectations have come down and it's going to be easier. the level has the lowest expectations with the materials sectors. that's one of the sectors that's been doing very well here right now. keep an eye on that as we head into the earnings season. all in all, i think you're going to see that volatility in october. you mentioned earlier, it's a very volatile month. but overall historically, it's typically the kickoff of that very, very strong period. >> really. i had no idea that this was overall a really positive month. >> oh, yeah, absolutely. it is that month where you see the bottoms formed, becky, but that is what i think people, especially right now are looking for. there is still so much cash on the sidelines that people are clamoring to get into this market. guys, polls here over the last couple of days they've shown that. steve liesman has been talking about. it goes with that idea we talk about markets rallying in four

stages. the first stage is despair and that's when your market hits the bottom. second is disbelief. we've kind of gone through that here. the next step -- and this is very important -- is acceptance. and that's where you see the retail investors start to get more involved with the markets and i think we're far from that euphoria stage that typically marks market tops. so, again, i'd look for not only the market money coming in from the sidelines for cash, but remember, those people who are sitting in bonds right now who kind of got smacked around in may, june, july when rates were going up, they're getting a little reprieve right now. they're feeling better because the value of those funds is going up a little bit. they may take the opportunity to move some of those monies into equities now. >> all right. you've had montgomery and ribs, huh? >> come on, joe, i was thinking you might be more hometown and talk about priceville chili or something. >> that's as good as skyline or

gold star. glennway and cleve warsaw. that's not necessarily the ride side of the tracks. >> no, no. >> i'm not wishing i'm from mt. lookout or high park. i'm comfortable being from western hills. i'm fine. all right. >> hey, what are you calling the reds weekend, joe? big series. >> i didn't like losing 1-0 to the mets and they're four games back. i didn't see what happened yesterday. >> they weren't playing yesterday. they've got best of three with pittsburgh this weekend. and if they win the wild card is here in cincinnati. >> oh, good. i'm going to hear from fratto on that, you know. you know where he lives. >> no. >> titletown. >> that kills me, titletown, especially with the bengals, you know? >> because that's -- no titletown is where we're from. thanks, chris. >> see you later, guys. when we come back, we're

going to talk about why you could soon be using electronic devices during your flights. >> but first, rivera officially saying good-bye to yankees stadium last night. he made an emotional exit. >> derek jeter and andy pettit coming from the dugout toes remove him from the ninth inning where they had two outs. >> this is a loss to tampa bay, but that's not what the crowd was paying attention to last night. >> and in the thursday night game -- yeah. in the nfl, the san francisco 49ers beating the rams in st. louis last night, 35-11. colin kaepernick had a pair of touchdown passes for the 49ers who totaled just ten points in losing their previous two games. right now as we head to a break, let's check on the national weather forecast with the weather channel's reynolds wolf. reynolds, riding into the week ynd. >> hey, exactly. a good looking forecast in parts of the northeast. maybe not a grand slam, but at

least a three-run shot. looks good through parts of new york, boston, through portions of the ohio valley. out to the west we're seeing more snow. rockies get a nice dusting yesterday. today will be day two of that action. but into the weekend we go with a chance of showers, possibly storms across the central plains. no rain from the pacific northwest. i'm telling you, the northeast will be amazing for you weatherwise. now, in terms of the delays, nothing doing for you in atlanta or new york. but denver, possibly some scattered showers and some backups by mid day and into the afternoon. hey, stick around. more "squawk box" coming up after this. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours. e-trade. less for more for you.

time four our executive edge. the faa is considering relaxing rules on using electronics in flight. it could affect standards for apple, amazon, google and amazon. it could make it easier for airlines to let passengers influencing in their own electronics. that would allow air lines to save the way to providing screens for everyone. the faa is not considering a change to the ban on cell phone use during flights. this has been something people have been agitated for for a long time. i always thought it can't be that big of a deal if you're using cell phones until i read to the bottom of that article writ said some pilot ves

reported cell phone interference on their microphones when they're trying to listen in. it's like wi-fi and hotels for andrew. this is his thing, totally. i know you're torn, andrew. >> i got scream at yesterday by one of the attend yaptds on jet blue because i was looking at my iphone and ipad for longer than i -- >> you're like alex -- >> you're playing that wordses with friends. >> with alec baldwin. >> we were texting back and forth. but no, my trick is i always try to put it down. that's terrible. you can't do that. >> but here is the thing. when you read those articles about the fm -- it's about fm frequency. so i thought it was in the 70s -- >> it was in the 60s, 1960s. i don't think you're hearing -- >> no, but andrew, road read to the bottom of that article. some of the pilot ves report hearing cell phone interference

when they're trying to take off and they're worried about the pilots getting distracted. this is a new thing. >> pilots are now using ipads. >> yeah, i know. but you know what? your need to text to the last minute and making last minute phone calls should not trump the safety. and they do admit that it's an incredibly small risk, but at the same time, that incredibly small risk, come would be put the phone down for a couple of hours. >> well, hold on. just so we're clear, what they're going to do is allow people like me to -- not to make phone calls, but to text and use wireless. >> i don't think it's texting, but i think it is -- >> i think it's just going to be like kindle? >> yeah. my concern with that, though, is it's so hard to determine wa people are doing with an iphone, whether they're using the rules properly or doing anything else. i kind of understand the zero tolerance for any of this stuff because you can't tell what people are doing on them. >> a pilot once told me that a much bigger safety issue, which is one of the reasons they don't

want you doing all this stuff when the planes are taking off and on is the larger issue about you're not paying attention. if there's a problem, if you're wearing headphones and you can't hear what's happening, if you have a big laptop and it's heavy and there is a problem, some of that is actually real -- to me, those are the largest safety issue. >> that's valid, too. >> andrew, with you i thought, you know, you were torn because you were very nervous flyer. >> that's true. >> so you have the combination of wanting to do that. but i thought in the back of your mind you would be like -- even if there's the slightest chance of my thing messing things up, i would think that you wouldn't -- >> i bet you want to be distracted so you're not thinking about what's happening when you're taking off. >> i don't know if laura will be happy that i said i'm telling you this, before i take off on every single flight, i said a text message to her. it's a totally crazy, it's to her and to henry max and it's a crazy thing. >> that's sweet. i like it. >> by the way, they're not watching at this hour.

maybe i'll do it in the 8:00 when they're awake. it's their birthday today. they just turned 3 years old. so happy birthday, if you're watching now. >> and your birthday present was sending them off to school where they're not -- happy birthday. >> and daddy is not home. he's in nantucket, so -- >> happy birthday, you have to get up and go to school with baurchb of other -- >> welcome to the rat race, boys. we've got good news for private foundations. a report finds that groups are replenishing coffers. the endowments gained 12% in 2012 compared to a drop of 7% in 20111. most of the year's growth was because of return in domestic sxinter national equities. andrew wab was that a bell? >> this is the horn that goes off at 6:30. now it's 6:30 eastern time on the east coast. we were warned that we were going to get a little bit of that. they do that at 6:30. do they do it on the hour after half hour, guys? oh, that's just when the fer

relieves. so if you need to catch the ferry, run right now because it is about to take off. >> andrew, you don't have a whale belt, do you? that would have made the morning if you had the whale belt. >> or pink pants. >> i don't. i don't. but i did think about going to j. crew on my way here yesterday. >> you know, you could get by with that. >> let's see your pants. >> the blue ones. >> let's see your pants, andrew. >> they're gray. there's nothing exciting going on. i wish i -- i could tell you i'm not wearing any, but that would be more exciting or less. i don't know. >> that would be cold. it looks windy there. >> it's freezing, actually. forget the fries, guys, mcdonalds is expanding its anti-obesity push. it's announcing it will allow customers to choose a side salad or fruit instead of orring french fries. obviously, this is trying to get ahead of what some of the critics have said, that they don't have as many healthy

options. >> what do you have to say about that, joe? was this the bloom bebergzation the world? >> no. the it's a good thing. they're not taking the fries away. you can have them if you want them. >> everything in moderation. >> as a mom, you end up taking your kids to mcdonald's probably more frequently than you would like if you're on the road traveling, if you're running through you things, if you're late and you're trying to get a lot of things done. and i've always resented not having the option. having more options is a great thing. >> and it's a business opportunity. young people don't go to mcdonald's because of this. >> options are a good thing. >> anyway, when we come back, a weekend showdown setting up in washington. at risk, a government shutdown. former treasury secretary roger altman will join us in studio. we'll find out why he's worried when "squawk box" comes right back. i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process.

so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.

they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence.

that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. the markets are tracking the countdown to a possible shutdown. roger, at this point, we have a lot of people who think that there is an unavoidable shutdown of the government at this point. are you in that camp? >> yes, i think there will be a

shutdown, although probably a short one. and after all we've had, believe it or not, 17 of them in the past 40 years. i think the real threat, the real problem is the debt limit. and so we'll get through this in terms of the shutdown issue. and even if we're shut down for a week, we've seen that before. the real problem, i think, is going to the very, very edge of the cliff and that's where i think we're going to go on default risk because of the difficulty of getting the house republicans essentially to agree on anything relative to raising the debt limit. that's the real issue. >> peter orszag was here yesterday. >> i saw peter. >> he said he would think it was better news to shut the government down because that means maybe we would avert a shutdown of the debt limit at some point. >> it's possible, becky, that the republicans will decide to cut their losses on the shutdown and focus their political

capital on the let limit, which a lot more americans apparently identify with. >> you saw that. the numbers of people that would only accept a clean debt limit raises i think it goes in the mid 60s that they want -- >> 47% versus -- >> yeah, that they want some -- but there are over 60 there should be some spending reductions in there. do you think the president -- let's not talk obama care. although there's something to be said, paeb, for -- i mean, there's another hit. that's the lead story in the journal today. and i guess one democratic senator wsh would was it, broke with it and said maybe i wouldn't go for a delay. >> joe manchi on. >> but let's say it wag something that we all want to eventually arrive at. is it just okay for the president to say there's no way i'm talking about this thing? other presidents have agreed on

certain things to get it done. >> i think the president's stance is the right one because everybody -- at least everybody here knows that the debt limit is nothing more than the automatic -- >> but this has happened before that there's been some discussion where a deal has gotten on. >> but if you're in the president's position, once you say even in the most indirect way or, you know, back room way i'm going to negotiate, then you're really stuck because then you'll never get a debt limit bill without a replay or some e replay of the 2011 scenario. >> this doesn't seem to be going well. we negotiated with the chemical weapons in syria. we negotiate with everyone else. we're negotiating with -- >> well, you know, theoretically, the funding of the government and the shutdown issue is where you would

negotiate over spending issues. it's about continuing resolution to keep the government going and the continuing resolution sets spending levels. theoretically, that's where you would negotiate. not the debt limit. >> is there a way to save face and for everybody to have something that they can come back to the table with if they agree to raise the debt limit? i would say is there a back room deal that can be cut, that they will sit down after that and start looking at entitlements, bus there's an issue of trust that i don't know if you could agree to a background deal. >> i think the real problem here is that by most accounts, the speaker, john boehner and majority leader cantor don't know wa tooin type of debt limit bill can get a majority of their caucus. and that puts the speaker in an impossible decision because he then has to dole with the so-called hastert rule. the former speaker denny hastert said don't ever bring a bill to

the floor if you're speaker unless you have a majority of your own members. boehner is in this following position. we would pass a clean debt limit bill, no conditions, with primarily democratic votes and a few republican votes. but that might cause boehner to lose his speakership. you're walking away in effect from your own caucus. so i see him in an impossible decision and validating it's one of the worst jobs on earth under the current circumstances. and i don't think that the speaker and the majority leader don't know what type of debt limit bill would get the majority of their members. and so the thing is going to go, in my view, right to the edge of the default. that's probable around november the 1st. >> i thought october 17th was -- >> well, if you look at when big spending amounts or big disbursements have to go, it probably could go to around november 1st. and i think we're going to go to the point where the first two wheels of the wagon, so to

speak, are over the edge of the cliff which gets into the question of what financial markets will do. and there's a real irony there because a lot of people in washington think let's hope financial markets weaken to the point where they put pressure on washington to force them to get to the debt limit. >> so the fed gave them a put. >> there's no way the fed is going to start tapering this year. >> the markets have seen this stuff before. and a lot of people are the nkts i've spoken to say they don't think markets will weaken much. they'll assume however late in the game, however much brinkmanship is involved that we won't default and we're not going to trade based on default risk. we'll see. but, on the other hand, you see negative rates on treasury bills, which doesn't exactly suggest people are terrified over this. so far from looking at entitlement reform or tax reform or anything even positive, all we're really focusing on now is just keeping the government open

and paying our bills. that's all we're able to do. and there's acrimoniny. and the base on the left is -- i think the president would have a hard time negotiating because he couldn't get guys on board for summers. he couldn't have gotten guys on board for syria. >> we're sitting here two months from now, i can this will all be passed. >> will we be trying to do anything to fix our structural -- >> that's a big question as to whether between now and the end of the president's term there's a big deal. i think myself, the president would like to have part of his legacy a serious fiscal deal. >> making sure obama care works is front is and center right now. >> that's a tough issue. rolling this out -- and we're all seeing -- >> i know. not only this, but some people worry about the individual exchanges, not just this glitz that they're talking about here. sin et october 1st? >> yes. >> october 1st they're open. i don't think -- january 1st is

when it goes into effect, right? >> the process begins -- >> the sfeerts and the congressmen don't have to were about. >> they have employer coverage. >> thank god. they don't have to live under this thing they passed. whoa, man. we might have a 100% turnover if that were to happen. god forbid. thank you. >> always a pleasure. >> i love having you here. good to see you guys. good to see you. coming up, an explosive interview with former barclay's ceo bob diamond. plus, we're watching a happy 15th birthday to google. we referenced the page earlier and you can play with the pinata and do all kinds of stuff. can you see it? "squawk box" will be right back. we went out and asked people a simple question:

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people.

so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.

if you're watchings from the airport, you can hitch a ride on an empty jet on its way to pick up a client. the cost to charter a private jet one way from new york to miami is in the ballpark of $10,000 to $12,000. but if you want an empty leg flight, you're looking at $2,000 to $3,000 for the entire plane. most jets can seat up to seven people. so a one-way jet could cost under $500 a person. andrew, you might want to think about that when you're trying to get home today. >> i am, but i've got my boat

right here. we're live in nantucket. bob diamond, former ceo of barclay's in an exclusive interview, his first since leaving the firm after the libor scandal. we're going to talk to him. also, entrepreneur ted leon and alan zarts. "squawk box" is coming right back. thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.

we've been bringing people together. today, we'd like people to come together

on something that concerns all of us. obesity. and as the nation's leading beverage company, we can play an important role. that includes continually providing more options. giving people easy ways to help make informed choices. and offering portion controlled versions of our most popular drinks. it also means working with our industry to voluntarily change what's offered in schools. but beating obesity will take continued action by all of us, based on one simple common sense fact... . . you'll gain weight. that goes for coca-cola, and everything else with calories. finding a solution will take all of us. but at coca-cola, we know when people come together, good things happen. to learn more, visit coke.com/comingtogether

a number of big questions hanging over the market. chief investment officer at one of the world's biggest private equity firms. it has $160 billion in assets under management. and if anything's long-term, it's p/e. but by definition, you probably get used to waiting things out. this is -- i don't know, this seems worse than previous shutdowns and debt ceilings. >> yeah, it's definitely one of the luxuries of the asset classes. we don't have to worry about what happens tomorrow or next week. on the other hand, no one likes uncertainty and no one likes the volatility. i think it's one of the reasons you've seen private equity deal volume kind of taper down a little bit. everyone's waiting to see what's going to happen. >> this isn't a situation where it's a next week or next month. you've been dealing with uncertainty and kind of showdowns like this in washington for five years at this point. >> yeah, it's disconcerting. you've seen a lot of the big private equity guys come out,

let's get this resolved. let's keep this sort of moving forward. >> for a while, it looked like things were getting -- like hilton, how long did it take that to finally kind of break even? and we were there, weren't we? >> yeah, that's been the amazing thing about this last cycle. i think the notion was these businesses weren't going to make it and then they kind of waited and waited and the gp worked them and worked them and the low-rate environment and the covenant free financing helped enormously and we're back out the other end. i think everyone's hoping we don't kind of take another plunge here. >> stuff that people bought right before the crisis. >> yeah, in the money. we're back in the money. you look at those '06 and '07 funds and they're all above break even. >> unless we muck it up, you say. why not ever use muck? you know what i mean? it could replace it, i may do that -- kids and everything else. i think it's excellent. >> it's yours to use.

>> really? >> p/e guys don't give anything away for free. would it be a time -- there's not time to buy something cheap if things go south, is there? you can't do anything. >> you wait. look, what's the good news? rates are still low. pricing is fine, not spectacular, it's not dirt cheap. and so people continue to move forward. >> can i ask you a question about being a thought leader and a thinker? i think you are. >> set the bar low. >> is qe masking -- i mean, is it like where the tide's so high we don't see that anyone's swimming naked right now? >> i don't think so. i think if you look, go to the companies and look at the pure fundamentals. hiring is up, earnings are up, people are delevering. the fundamentals are sound. >> is qe helping with that? >> it is helping. i think you've seen it across different sectors. automotives, housing rebound, and showing the housing market

is sort of coming back strong and private equity has benefitted from that. >> there's some people that think that qe, you know, that the market can't do what it's supposed to do. there's no volatility, no interest. we need to get this -- >> this is where i think the private equity asset class has the advantage of being able to be patient and not have to come in, come out, come in, come out. and it helps, makes it easier. >> all right. thank you. >> thanks. >> good to be here. coming up, former ceo bob diamond is with andrew. be right back.

just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.

in this hour, a very special interview with barclays ceo bob diamond. plus, groupon chairman and founder of the revolution growth fund ted leones. we will cover it all as the second hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan. andrew is in nantucket, massachusetts. he'll be joining us shortly with a special guest. barclays ceo bob diamond. yesterday, the markets eked out a gain after five days of declines. this morning, looks like the

futures are indicated lower. dow futures down by about 40 points below fair value. in our headlines this morning, the senate has votes scheduled today on legislation to avert a government shutdown. the measure is expected to pass. but the senate legislation does not include house passed language that strips money from obama care. house republican leaders said they are unwilling to accept the bill. today, we'll hear from new york fed president bill dudley once again along with boston fed president. yesterday, kansas city federal reserve president ester george argues that the key thing is that the clarity of which the fed says the policies are heading. that's what we've been hearing from the market too, though. we wonder for the rest of the fed is listening. >> blackberry results are here. they're even hard to -- i'm trying to figure out, what is a gross -- what is a negative gross margin? it sounds bad, especially when

it's 23.8%. >> meaning you're losing money on everything you're doing? >> second quarter gross margin, negative 23.8%. second quarter revenue, 1.75 billion. second quarter loss, $1.84 or almost $1 billion. $965 million. adjusted gross margin is 36%. and there's also a $934 million pretax charge against inventory and supply commitments. so all of these numbers have stuff in them. they recognize revenue on about 3.7 million smartphones in the second quarter. and second quarter revenue breakdown, 49% was from hardware and 46% from service. >> yeah. >> and 5% from software. there's also $72 million in restructuring charges. they've got 2.6 billion in cash and investments at the end of the quarter. >> can i tell you also about another battered company that

we've been talking about in the news? jc penney just announcing that public offering is going to be 84 million shares of the common stock. it's going to be priced at $9.65. so we've been wondering when they announced yesterday they'd be putting this huge tranche out. we wondered what the price would be, 965, 9.90 is where it was. this was a bit of a shock yesterday to people watching because it's something like 38% of the existing quote will be the new shares that are out there. >> just $2.3 billion company at $10 a share. what is that? that's -- is that only 230 million shares and now we're doing another 84, that makes sense, right? >> yeah. it'll be about a little over a third of the flow once this is combined in. >> yikes. >> yeah. >> andrew does both of these companies very well. blackberry's going to be down in the sevens today. looks like jc penney is now closed at 10.42.

>> 9.90 is where it's trading right now. >> obviously you'll be able to buy it at 9.65, i don't know why anyone would buy it at 9.90. i can figure that -- >> on both counts. >> i need you for the calendar and i need you for that. if you can buy it on the offering at 9.65, you don't pay 9.90, do you? >> that's pretty much correct. i don't understand that, that doesn't make sense to me. >> i think they need to go down there to get it done. don't they? that's what people are telling -- >> you think unless they're going to go lower? if you're going to make that kind of offer, that's what you'll have to do. that's probably right. >> oh, you have a special -- >> i do have a special guest. i should say where we are first of all. we are at the nantucket project live in nantucket. the nantucket project. a relatively new event for big thinkers and big names. and i'm joined by one of the people who helped start all this, part of the family -- the circle of founders, if you will. bob diamond, former ceo of

barclays, the first interview, it's an exclusive. first time you have come out publicly on television since leaving barclays, stepping down from that post. what is it, year and a half ago now? >> over a year. >> we have a lot to talk about in the op-ed, in the financial times, two weeks ago, five years later, too big to fail. and i want to get to that. you also did a panel yesterday on ethics. and i want to talk about that. but i want to start. and maybe it relates to ethics. because we haven't seen you since you left barclays. when you look back and you left under a cloud relative to the libor scandal, what was the lesson? what was the mistake you think that you may have made in all of this. when you look back at what happened a year ago. >> andrew, you know, when i looked back, which is important to do from time to time, that was a very difficult period for me.

a difficult period for barclays. a difficult period for banks, it was a difficult period for the uk. and i think one can't help but look back and say could we have done more around citizenship, for example. should we have been implementing more quickly some of the new strategies to integrate operations in technology. i think the important thing is lessons have been learned. barclays has moved on. it's a great institution. it's been doing banking for 320 years. it's got good strong new leadership in anthony jenkins and sir david walker. and i think it's doing its fund raising now. the rights issue is out there and i'm buying my rights. i'm bullish on barclays. and it's become a better and stronger institution. >> one of the things you mentioned yesterday was what you called the no jerks rule. >> right. >> that you like to have no jerks around. how do you avoid having jerks around? given the problems that happened related to libor, there was some

jerks there. >> it was a great panel. didn't you think? i think it's a time when you know having these debates is appropriate. and i think one of the things that came out of the panel is a lot of things haven't changed. it's not hard to tell, you know, good guys from bad guys, people that have ethics and integrity and people that don't have ethics and integrity. one of the things we're getting to as a panel is it's important to have a strong culture and to have rules that enforce the fact that if people don't behave appropriately and don't support the culture of the organization, they have to leave. >> all right. i have argued as you know, because i wrote the piece about you in the new york magazine that you were pushed out unfairly by the government, that it was a little bit of a political witch hunt at the time. that you were an american banker not liked for reasons probably unfair. we were talking the 6:00 hour this morning about jpmorgan. and this potential big

settlement they have on the table. and i made the comment that this is -- could be close to extortion. that at some point, the government, what is the role of government in terms of regulators and how far they can push and get involved. and so i wanted to ask you, you know, as somebody on the other side of us and look at what's going on with jpmorgan. and also, you know, when you make a mistake at a firm and in the libor case, you raised your hand and tried to come up with a settlement and look what the outcome of the settlement was. jpmorgan, they made a lot of mistakes, they also raised their hand and said we made a mistake. how should the government look at this? and if you're a co of a business, how should you look at this? >> very, very good questions, very complex, not simple. you have situations with barclays last summer where the strategy was from the board was to settle quickly, settle early, settle with the support of the regulators. in here, there's been criticism about maybe it's taking too long

to settle. and i think ultimately, andrew, it goes back to what i was saying in the op-ed. the ultimate arbiters of the management of banking are the investors. the shareholders, and that's the voice we need to listen to. >> too big to fail and you talk about it in the op-ed, we are five years later, and you think we are still too big to fail? the firms themselves are too big to fail? >> one of the things i did last summer after leaving barclays, i spent a fair amount of time teaching and yale gave me an opportunity to teach in the executive education program with undergraduates, graduates, and what was fun was i could stay in the same topic which was the future of financial services. but keep going in front of groups of really, really smart people. and it really helped me think through what is the future. and the conclusion we kept coming to. the students i kept coming to fairly quickly is that the political leaders do not believe

that too big to fail has been eradicated. and i think in many ways they do not believe that too big to fail can be eradicated. and one of the things i see to prove that point, if you will, is that we don't see focus on how do we get resolution and recovery as opposed to buffer upon buffer of capital, new rules to restrict activities of banks. and so, i think the single most important thing if we're going to -- if we're able to say never again, no taxpayer money again is to have an effective, rigorously tested resolution recovery plan that's accepted by the major governments around the world. >> is that a fair goal? do you think we can ever get to a point where we really will never have an institution that's too big to fail? that we're never going to have a situation if housing goes down 30%, 40%, you're not going to be back in the same soup? >> i don't think we're trying to say banks can't fail.

and if there's no risk, we're not going to be driving the economy, we're not going to be creating jobs. i think what we want to be comfortable of is if a bank does fail or gets into trouble, doesn't create systemic risk and not a burden on the taxpayers. i'm absolutely convinced that there is the tool kit to implement that between the u.s. and the uk, between the major economies around the world. >> sandy weills said we should break up the banks for commercial reasons and other reasons. what would you do? >> well, let's look at the facts. the theme at our conference in nantucket is truth and the consequences of truth. and the truth is that banks like barclays and like jpmorgan were very steady during the worst of the financial crisis. and, you know, i think about a barclays i joined 16 years ago that 90%, 95% of the business was domestic, it was in the uk, sterling based, retail and

commercial banking. and during the crisis, the benefit from having built barclays capital an international business. barclays global investors gave it diversification of income, but diversification of investors, of depositors. and those platforms were far more stable during the financial crisis. >> and therefore there's no reason to even think about it? >> no, i -- i think the focus should be on an effective, you know, well-tested resolution and recovery. >> can you get a global regulator? i was joking -- in new york, the folks in manhattan and new york city can't get along with the folks in albany. the idea you're going to have a global regulator and all the banks will sing kumbayah, is that a realistic goal. >> i don't think the regulators think that's a particularly big challenge. but what i would also say, andrew, is this. if our political leaders do not

believe it, let's get on and restrict the models of banking. >> right. >> i think today what's difficult for many of the larger, more complex, more international banks is that they recognize the importance of the cross border business. but they're unsure about the rules, the regulations and how to operate. >> there's been an argument made that the u.s. banks are actually quite strong or, at least, good shape or better shape compared to the european banks. you have a vantage point that others don't on european banks. your sense. >> i think the u.s. banks are far stronger and far safer than they were precrisis. i think the uk banks are far safer and stronger than they were before the crisis. i think it was as recent as the fall of 2011 we were worried about the solvency of some of the major european banks because of the level of leverage had not been reduced post crisis.

and what was done around capital liquidity and leverage in many of the u.s. and uk banks hadn't been implemented in europe. draghi implemented the repo program which was incredibly effective and solvency is not an issue today. i think the challenge i would ask you, i'm sure there's an answer to this, i can't think of it. >> i can't think of one. >> couple other quickies. one, we both were there last night, larry summers walks in. do you have views on the fed? who should become the next fed leader? >> i think there's many good candidates to become the next fed leader. i think larry having withdrawn from that, there's so many things that larry can do for our country. it's just -- it was great to see him last night and see him in good spirits. >> joe kernan, back in hq has a

question for you, bob. >> hey, bob. a lot of talk. we're all talking about jamie and jamie dimon. andrew and i had a lunch the other day. a british executive that said probably should split up the chairman and ceo. and that would've helped with jamie. i know that's -- in europe, they look at us and think we should adopt that. but when we look back, we say it hasn't worked over there as well as maybe it should. do you think a lead director is enough? is it something we really need to -- would it have helped jamie dimon? and then i have a follow-up on that. to ask you since you're out of the business now. you can answer this too. you think jamie didn't -- the journal says he didn't toe the line with the white house and this is almost punitive at this point against him. do you think there's anything to that? >> well, first of all, i think if we look at the -- if we look at the evidence and look at the facts, i think jamie's been a

very strong chief executive. i think jpmorgan is the stronger institution today than when he -- when he came. and i think his stewardship during the financial crisis was strong. i think those are the facts. you know, joe, it's really tough. the independent chairman versus the ceo and chairman. and as you said, the system in the uk was different than it is in the u.s. and i hate to say this, but it's what i feel. i don't think this is about the model. i think it's about the quality of the people. >> yeah. do you think jamie's being unfairly targeted at this point? >> you know, jamie's done a very, very good job and that's the facts. >> you're good. okay. i'm going to read between the lines there. since you've got nothing to lose now except maybe you get audited or something. so, you know, just speak up. speak up. >> what's the plan for bob

diamond next? you start this atlas merchant banking? >> atlas merchant capital. all, nimble, private, which is a lot of fun. and i think, andrew, one of the -- we've talked about my op-ed. we've talked about the things in regulation that need to be completed. we've talked about the difficulty that the big banks are having in understanding the final rules. but in any crisis like this, there's opportunity. and i think one of the things that's happening is there are all kinds of new models, more entrepreneurial models of finance that are growing up around the big banks. one of the things we found fascinating in atlas merchant capital is we've looked at platforms we'd like to invest in over the last four or five months. we've looked at probably 20 different platforms. and in none of those instances has there been a big bank looking at them for acquisition.

and yet precrisis, pre2007, i think each and every one of these platforms would have been snapped up by one of the big banks. >> should we expect tore very entrepreneurial. and what i love about thissmall and it's private. >> okay. stay private. bob diamond, thank you for doing this. i'm going to send it back to you guys at hq, guys. >> he has an opportunity to be guest host on "squawk box." i don't know whether you mentioned that. >> he does. you want -- joe is inviting you right now. guest host "squawk box." >> i've got to do it. >> he's got to do it. >> now that's an opportunity. wow. anyway, maybe we'll make him a master of the market or something too which, you know, alan greenspan has all the other awards and then he's got our award above all of them. up next -- thanks, bob diamond for coming on. good to see him. we're going to welcome guest host and political pundit joe watkins. and then, i've got to buy this guy lunch. i owe it to him, but looking

forward to it, bob shrum, plus debbie wasserman schultz. futures are down, we broke our five-day losing streak and we may resume it today, you never know. "squawk box" will be right back.

we have four days away from a possible government shutdown. and after that, lawmakers will have to deal with the critical issue of the debt ceiling. let's get right to the debate with our guests, bob shrum and joe watkins. also -- i hope you ate your wheaties. you've got shrum and representative debbie wasserman schultz, author of the new book "for the next generation: a wake up call to solving our nation's problems." good morning one and all. >> good morning. >> i'm just going to -- let's get them. i'm maybe a little bit more aligned with joe, but i want to see this as a smackdown, a tag team. why did you agree to this? you've seen debbie before, right? >> of course. >> she can smoke you alive. >> she's going to try. >> congresswoman, i'll ask you one thing, and i saw this, "washington post" talking to

something that i guess our colleague chris matthews said, pointed out, tip o'neill, ronald reagan, there were seven shutdowns with president reagan. this is not unheard of, is it, to try to get something in return for keeping things going? >> what's unheard of is for us to be debating long settled matters and unrelated matters to whether we're going to pay our nation's bills and to whether or not we are going to actually pass a budget and not allow the jeopardizing of social security payments, the nonpayment of salaries to our military, the possible nonpayment of benefits to our veterans in exchange for completely unrelated issues that were the subject of an election and that the republicans lost the election over. >> the election was 39% in favor of obama care.

and the notion there's a glitch. what about a delay for a year with the individual mandate or something. >> the overwhelming number of americans in the same poll said they were absolutely opposed to linking defunding obama care to whether or not we actually keep the government running and pay our bills and pass a budget. >> if you ask someone -- >> what they want us to do is they want us to -- if there are kinks that come up during obama care's implementation, we should sit down and iron those out. >> which means not so fast, which means in other words, delay a year. >> no, absolutely not. >> this is an illusion. we're not delaying for a year. >> that's right. >> it's not going to happen, number one. number two, the poll shows 57% of people do not want obama care defunded. i think underneath all of these numbers at this point, people say we fought this out, we had a long battle about this, a presidential election about it, it's going to happen, let's see how it works.

as the president said yesterday, if it collapses, if it's bad, they'll get rid of it. >> can i point out -- let's talk about what delaying for a year means. what the republicans are saying by, quote, delaying the individual mandate for a year. means you're basically cutting the legs out from under the affordable care act's ability to make sure that insurance companies can't drop people or deny them coverage for a pre-existing condition. the financing and the affordability simply doesn't work -- >> -- right? >> no, that'll be in effect for everybody else january 1st. >> there are -- >> that won't be possible. >> you probably saw the piece the other day and i read it in the journal where he's saying the republicans have it all wrong because if you put it in and it really does collapse under its own weight, it would make it hard to do any more expansion of the the entitlement state. and to do it this way, it could be fixed. and it's not in republicans' best interest to -- >> what's unbelievable that we're debating is whether or not insurance companies should be able to continue to drop people

or deny people coverage. >> that's not the only thing. >> i'm a breast cancer survivor -- >> there are lots of things to debate. you know -- >> yes, whether or not we have lifetime or annual caps. whether or not young adults can stay on their parents' insurance until they're 26. those are big things. >> i think the idea that making sure that people who have been under funded or not funded or not covered at all is a noble idea. but you don't want to throw the baby out with the bath water. we did have arguably the best health care system in the world. >> that had 15% increases. >> but there are tons of people who happen to be insured right now who are happy with their coverage, like what they've got -- >> and they'll be able to keep -- >> everybody has to figure out what's next and how this affects them. >> come on, joe. that's simply not true. >> but the sad point becomes -- >> that's simply not true. i'm not going to let you distort -- >> if they look --

>> i'm under the crossfire. >> of the facts. the fact is, you get to keep the coverage. >> i'm not in favor of de-funding obama care. but i also look at the situation where you get to keep your coverage. that's not the case. we hear from people all the time their coverage is changing -- they're getting put into the exchanges. it is true. i heard from people yesterday. >> excuse me one second. that isn't happening -- >> sending you to the exchange? no, that is purely anecdotal. >> it's not. there are companies that reported this. >> there are a couple companies, republican-leaning companies want to do this to undermine the act. the fact of the matter is, there's no comprehensive evidence indicating this is happening. >> there are -- >> what about the cost -- >> excuse me, hi, guys. hello? >> the fact of the matter is that prior to the affordable care act, you have companies making decisions all the time. in fact, many companies, too many companies were deciding to drop -- covering their employees

altogether. thanks to obama care, we are going to be able to maybe sure that everyone in america has coverage, that 96% of americans -- 85% of americans covered by their employer can keep their coverage. any anecdotal information -- >> -- until it goes away. >> there are all kinds of challenges here. we know there's been an extension on the employer mandate. especially with employers, small employers, they don't know what's coming next. they're going to have to spend money one way or another. to pay somebody to decipher what the law means to them so they don't hurt their bottom line. and if they know what it's going to mean, what they're going to do is play games with the -- the poorest people the people who can least afford to work less hours. i work with poor and underserved people. >> and i represent -- >> communities. >> i represent thousands of small business owners. so as do i. i represent thousands of small business owners. i'll give you an example of one

of them. i was able to talk with a small business owner who previously one unable to afford providing coverage to her 21 employees. one of them was never able to get a well woman visit as a result of not having coverage. and because of obama care, she was able to take a 35% tax credit to be able to provide that coverage to her employees and now they are all covered. and then in january, that goes up to a 50% tax credit. it's simply not true this is confusing or complicated. and on top of that, it makes covering your employees for a small business more affordable. so the distortions about obama care must stop. the obstacles in the path of implements affordable coverage for all americans needs to stop. we need to work together to get it done. >> i agree with the work together to get it done part. >> my republican colleagues -- >> but your colleagues, your republican colleagues are working to get it not done, to block it in every way possible. >> as our republican governors across the country. >> it'd be much better if we had some dialogue.

we need to talk to each other. >> dialogue is great, shutting the government down over defunding obama care is totally irresponsible. >> a lot of this goes back to -- unfortunately senator kennedy died, you lost that seat, couldn't send it back to be fixed. it had to be done, no republican support whatsoever for the biggest entitlement, you know, we've added since the johnson years and there's still this overhang of animosity -- >> there wouldn't have been -- >> there wasn't a single republican vote. >> the last thing kennedy wrote, where he said this bill is imperfect. it's going to have to be fixed over time. let's fix it. delaying it -- >> a republican -- >> who then lost the seat decisively the next year. >> we've got to go. 15 seconds. thanks to congressman wasserman schultz and bob and joe will stay with us for more of this. when we come back, more about this uncertainty in washington, raising the worry level of wall street. the dow and the s&p.

avoid a six-day slide, but will upcoming debts, will it wash away the bulls of 2013? that discussion is coming up. "squawk box" will be right back.

in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. chicago fed president

charlie evans making comments to reporters reporters this morning. he says there's a decent chance that tapering could start in october or december. but, there's also a chance it could be pushed into 2014. chance it could be one or the other. evans argues that central banks that this central bank needs a more confident outlook on the economy before tapering. suggests the third quarter gdp data will be helpful in trying to decide. evans voted against tapering in september citing the labor market outlook and the lack of robust growth. and that's what we decided. all these guys speak, but because it's data dependent, you need to look at the most recent economic number. >> but you don't know which carries more weight. >> yeah. when we come back, andrew will bring us insight on why larry summers didn't get the fed job. plus, what's ahead for groupon?

ted leonsis joins us from nantucket. a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪

talk of averting a government shutdown helping to lift the market slightly on thursday with the dow and the s&p 500 snapping a five-day losing streak. joining us now is the executive director in stanford, connecticut, and charles, we've been talking about all of the back and forth in washington and what this means for the markets. is this a problem as we get closer? or has the market discounted this as something we've gotten used to where we're used to getting 11th hour compromises? >> good morning, becky. thanks for having me. the market is used to dysfunction in washington and the lack of cooperation amongst lawmakers. that's why the s&p 500 is within only a couple of percentage points of its all-time nominal high. however, as the clock ticks, and a continuing resolution is not found, the chances of a -- of a government shutdown even for partial nonessential services increases. and as that continues and

shutdown of services persists say for several weeks, that has negative implications for not only gdp, for the fourth quarter, but also for consumer confidence and also the ability to attack the more important issue of the debt ceiling. >> so is there a point of no return where this becomes some sort of a dance and this is really affecting the economy, affecting consumer confidence and you're not going to get out without a few scrapes? >> well, you know, if you and i were in the position that the elected officials are and we behaved the way they do, we would basically be sapphire e f our jobs. in terms of lost productivity and the misallocation of resources. but as we move further along, it'll be increasingly difficult. and boehner's in a difficult position because he knows the president does not have a strong popularity and is not terribly credible in his own party and across the aisle.

and pelosi and boehner have an increasingly difficult time in reaching a consensus and conclusion. >> boehner has a pretty tough time being able to deliver his party on this. you can look at both sides, i don't know they could bring the entire parties back around. >> that's right. the way i look at it, personally, i think that, you know, the republicans are playing the wrong card here in that they should not try to defund obama care. the american people will see it for exactly what it is, which is a poorly constructed piece of legislation, a fourth entitlement that the country doesn't need and doesn't want. and the only caveat they should attach to a senate proposal is that the elected officials in washington be held to the same account and use obama care the way the 308 million citizens of the united states must. if the affordable care act is so good, then elected officials in washington should live by it, as well. >> all right, charles, let me ask you this, in the past, in the last five years, every time we've gotten to some real

breakdown point in washington, d.c., the markets have reacted and reacted badly and put additional pressure on the leaders to get back in the room and come up with a compromise. if the market is used to this and not going to react in -- if it's not going to sell off sharply before now and then, does that mean we're less likely to get it? and some sort of an agreement and does that mean the market has a bigger reaction down the road? >> i think you're on to something. the market will wait and discount that there will be an eventual solution. but if there isn't one that's had at the 11 1/2 hour, you'll see a selloff. nikkei could probably trade off if the yen rallies significantly. u.s. treasuries would rally, s&p futures come off 5 percentage points or more. >> thank you for joining us this morning. >> you're welcome. let's get back to andrew. he's in nantucket. and andrew, at this point, the

sun must be coming up. looking a little brighter there. >> a little bit brighter. i wanted to talk a little bit about conversations i had last evening with a number of friends of larry summers. larry summers is on the island and participating in the nantucket project. there was a lot of sort of postmortem work going on, gossip among the chattering class about what they could have done or should've done and why he did not get the post. and a couple things i picked up which were pretty interesting. the first is, you know, we always talked on the show about whether there was a campaign to get him the job, there really was a campaign to get him the job. many of them thought they'd been too slow in pushing the president and starting that campaign. should've started it much earlier. we talked on the show about when the president first made that comment to charlie rose and they said they should have been right in there with that campaign on day one. they all look at him, larry summers as a casualty of -- if you will, of the syria situation. but the other thing that actually was the most surprising to me was the view that they

should have actually gone more negative on yellen and should've gone more negative on yellen early. there was a blame game going around last night talking about the fact that yellen, perhaps more than ben bernanke is responsible for the transparency effort as part of the communications committee that she's on at the fed. and if you think that transparency has not been a success, that ultimately she should be held responsible. that's one point that was made repeatedly by a number of people. and the other point i thought was so interesting is, you know, larry summers was being painted with a broad brush of being too close to wall street. and there was a view and maybe it's counterintuitive that actually it's the opposite that janet yellen was actually closer to wall street in many respects, less likely to take on the big wall street titans and they'd give his willing to start a fight sometimes that he would be willing to take them on. took them on in op-eds back in 2007 calling for them to raise

capital. that was actually a couple of little pieces of juice and gossip that got you thinking about what was happening behind the scenes during the past couple of weeks. so there it is, i should tell you we've got ted leonsis coming up after the break when "squawk box" returns at the nantucket project. thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. nascar is ab.out excitement but tracking all the action and hearing everything

from our marketing partners, the media and millions of fans on social media can be a challenge. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar win with our fans. ♪

[ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪

welcome back, everybody. let's take a look at the futures this morning. we have seen a little bit of weakness. yesterday we saw the dow and s&p break a five-day losing streak. down about 42 points below fair value. s&p off close to seven points. andrew is attending the nantucket project that's taking place this weekend. he has a special guest with him right now. andrew? >> yeah, i know, i need hazard pay. it's hard work out here. i'm here with ted leonsis. he's now former aol, of course, but now the chairman of groupon, also the owner of many teams in washington and on the board of american express these days, as well. thank you for being here. >> thank you. welcome to the gray lady. >> you have a place here, right? >> i do.

>> next to david rubenstein. >> i am. i love nantucket, and you'll see all four seasons today. >> real quick, i didn't notice, tell the audience what's right outside his house. >> david's a great man and right outside his beautiful home on the water, it's a big rock and it says i'd rather be working. >> which is true. which is true of david. let's talk mobile. because you are spending a lot of time in the mobile payment space, mobile worldment groupon, that's a big part of it. and twitter is the other piece of it. we talk about twitter almost every morning. where are you on twitter? >> i think twitter is a great success story and really kind of god child of what we were building at aol in the first generation of getting people online. >> the god child -- you think it's almost -- >> i do. >> a continuum of what you were doing at aol. >> very much so, i'm proud of what we've done. we invented instant messaging

and realtime commissions with aim. and turned it into a publishing platform in a one to one and one to many communications. i think it's just getting started. when you look around the world, 2.2 billion people connected to the internet. the majority of them now using mobile devices. >> would you invest in twitter at the ipo? >> yes. >> and you don't have a stake in it now as a -- >> no. >> i'm sure you wish you did. >> i wish i did. >> let's talk groupon. >> spent about six months, nine months really in the trenches running it. >> well, i've been involved in the company since day one and i've been on the board and i did step in to be co-ceo. and now i'm the ceo of the company. >> is there an opportunity for this company? it felt like it was going in the wrong direction up until a year ago and now there's a view that things are coming back but it's still tough. >> well, i think groupon, companies like twitter,

companies like starbucks. just about every great company is trying to take advantage of this local social mobile realtime phenomenon that's really birthing, i think, the biggest new industry ever. and so i think groupon, ebay, amazon, companies like that are the next generation ecommerce platforms. >> it's no longer about e-mail. no longer about getting a coupon over your e-mail. >> that's right. >> so the future looks like what then? >> i think that people will start their day thinking about what do i want to do today? where do want to eat? and what do i want to buy? and hopefully they'll look at their phone and click and buy on groupon. >> how much is it going to be literally, aisi'm walking down street and my phone is alerting me. >> yeah, we see click throughs going higher as the closer you are to the locale. >> i think to myself, american

express wants to be in that game. you know, mastercard. i assume everybody wants to do it. plus, then, the merchants themselves who think they can go straight to the consumer. >> well, scale will really matter. and there's literally tens of millions of merchants and people doing commerce locally and being able to have point of sale and touch points and services to merchants really matter. >> really quick, android versus ios. when you're building new stuff at your companies, where do you build first? >> i think android is the winner, obviously. reminds me of the windows and mac argument early on. and i'm a mac user. i love the mac, but android everywhere. >> you're suggesting apple's okay. we're going to have you back at 8:40. talk to you about a lot of other things. becky, back to you and i know you still have your blackberry, we're sorry you can't be part of this conversation. >> thank you.

speaking of blackberry, we should bring you up to date. if you haven't seen this already, blackberry came out this morning with an adjusted loss of 47 cents. street was looking for 49 cents. the gross margin was a negative 23.8%. company canceled the conference call. if you have any questions about what they put out in the release, you'll have to hold off and wait on that. cash and investments are now at $2.6 billion. second quarter revenue, 49% came from hardware, 46% came for service. also, take a look at shares of jc penney this morning. we'd been waiting to see what the offering would be priced at. looks like they're going to be selling 84 million shares at $9.65. earlier this morning trading at $9.90 after closing yesterday at $10.45. you can see it's trading down another 9% to $9.47. as people brace for a big wave of additional shares coming on to the market. i think that's something like 38% of the total share is going to be these new shares.

>> it's going to go to where the public offering is. andrew, are you gone? andrew? >> i'm right here. >> have you heard there once was a man from nantucket who kept his cash in a bucket? but his daughter named nan ran away with a man. it's fine, it's clean, it's 1902. it was clean. it was clean until 1927. and then it was there once was a girl from nantucket and then it goes straight downhill. straight -- >> i wouldn't go there. >> why not. straight downhill from there. >> right. andrew deis clay started doing that. that's how i remember it, but that's a whole separate topic. >> 1902, it's fine. nothing here, paul tucket -- i'm very naive, i don't know why it has a bad reputation. . coming up, the top vehicles keeping you from the next fender

bender or what could be much worse. "squawk box" coming right back.

we're coming back live from nantucket. we've got alan schwartz coming up. we've got a big 8:00 hour coming to you live from nantucket. "squawk" returns right after this. building animatronics is all about getting things to work together. the timing, the actions, the reactions.

everything has to synch up. my expenses are no different. receiptmatch on the business gold rewards card synchronizes your business expenses. just shoot your business card receipts and they're automatically matched up with the charges on your online statement. i'm john kaplan, and i'm a member of a synchronized world. this is what membership is. this is what membership does.

the dow stops the skid. but can lawmakers avert another debt pile-up before it's too late? the best vehicles to avoid that next fender bender or

worse. >> i'm embarrassed. i really thought i could feel it. >> phil lebeau has the top names and avoidance technology. >> plus, we're live from the nantucket project. >> the models of banking and the management of banking are the investments. it's the shareholders, and i think that's the voice that we need to listen to. >> former ceo of bear stearns. "squawk box" begins right now. ♪ right. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernan along with becky quick. andrew ross sorkin is in nantucket this morning. he's got all his cash in a bucket. we'll get to him in a few minutes. we'll get to him, and we'll get

more from bob shrum. first, though, becky has some of today's top stories. let's look at jc penney shares again. they will offer 84 million shares priced at $9.65 apiece. if you look at what's been happening to the stock, this is actually -- actually, the stock is now pricing almost exactly where that offering is, $9.66 is the last trade. that's a drop of about 7% from where it was yesterday and yesterday did have a very rough day. in a filing, the retailer says it expects to end the year with about $1.3 billion in overall liquidity excludeing the proceeds from the share offering. there had been a lot of talk from the company about whether it was facing troubles from suppliers or not. this offering, they are thinking, will help shore them up with cash. but again, it's going to be coming at a steep discount from where the shares are trading recently. blackberry reporting a roughly $1 billion quarterly loss in line with the guidance it offered in a warning last

month. this morning's news comes days after the company accepted its largest shareholders tentative $4.7 billion bid to take over blackberry. and we are waiting for economic numbers at 8:30 eastern time. personal income and spending numbers coming up. income is expected to rise by .4%, spending is expected to rise by .3%. at 9:55 eastern time, we also have consumer sentiment numbers. let's take a check on the markets. the futures have been under pressure. dow futures down by above point. the markets are on track to have a loss for the week. we've been looking -- it was five days of losses, yesterday eked out slight gains, this morning those red arrows once again. overseas in asia, the markets were slightly mixed. in europe in some of the early trading this morning, you'll see some red arrows. the ftse off by about .8%. that's the biggest decliner now. let's get to andrew in nantucket. andrew, take it away. >> we are live at the nantucket project where a number of big names, big thinkers, titans of

industry are here talking about x. >> yes. henry and max sorkin, 3 years young. >> at 3 years, you want to be old. >> yes, the sorkin boys are 3, so happy birthday. talking about business, though, the big issue of the morning has been jpmorgan and jamie dimon and all the lawsuits and the potential $11 billion settlement. some of which is a result of what happened to bear stearns because they acquired it with pressure from the government. do you think this settlement makes sense? do you think these numbers make sense to you? and on this larger question about fairness given that the government pressed them into this transaction. how do you think about it? >> i don't know any of the details. i think jpmorgan's a well-managed firm. i think everybody at different times makes some mistakes, but we're in an environment where people -- there's a lot of value to regulators and officials to show they're really punishing

people and i think it's overdone but, you know, it's not something i can get involved in. >> in terms of just the magnitude of the numbers, though, does that make sense to you? >> it doesn't feel like it makes sense but makes good headlines. >> makes good headlines. let's talk about m&a and deal making. you've been involved in perhaps the largest deal in history, which was vodafone verizon deal. and going to the issue of big banks and the need for big banks, that was a transaction that required $50 billion in debt. when you look at the deal, what does that say, though, about the confidence in the system or was that really just a one-off deal? >> well, i think it's related, but i think it's not just the confidence in the system, but the confidence in the markets. i think, you know, verizon has been a client for 20 years. for the last ten years, we've looked at opportunities to buy the vodafone stake. the capital markets came together in a way where we could pay them a fair price for their asset and let their shareholders

be happy. but at the same time, generate free cash flow and earnings. >> we've been waiting for a big m&a wave. and a sense there's so much cash sitting on the sideline, do you have any -- and every year we say it's going to happen, it's going to happen. you look at a deal like this. does this say to you that the train is about to leave the station? >> no, i don't think so. i think there's clearly more activity in the board room if you talk to anybody, there's more things being contemplated, but i think we're in an environment where people -- deals don't happen as often, they don't happen as quickly. they take longer and fewer of them get to the finish line. and a lot of that has to do with, you know, shareholders are on top of managements, they have a lot of cash, they want them to return that cash. so in a lot of cases, managements feel like the bar is very high in what they can do on m&a. having said that, with margins having expanded to where they were, more and more companies are looking and saying we have

to consider some strategic options. so there's a lot of activity below the surface, but it takes, you know, there's less yield. there's fewer transactions completed for those that are contemplating -- >> i think joe's got a question for you, joe? >> just going to try to get you two guys to talk about your column, andrew. i am excited about the dodgers. i can't -- i can't help it. and i've always loved the dodgers. i'm a reds fan, but it's a great rivalry. and dodger blue and, you know, all the way back to sandy colfax. i love -- it's going to hurt when you lose to the reds a little bit. but -- >> well, we're looking forward. i hope we do see the reds. and that's really mark and todd and scott and i'm along for the ride but it's a fun ride. >> can i say one thing to you? the way you redid dodger stadium is spectacular. >> the way you restored it and made it work to go to games

there. do it all the time, love it. >> great. >> this is just amazing. it's fantastic. but then, you know what, i heard you were talking about income equality, andrew mentioned that and i couldn't help but seeing our great yankee robinson cano. ten years, 310 million, andrew. ten years, we need -- congress has got to get involved here. some kind of -- some kind of -- you've got to look and see what the hot dog vendors and everybody is making and find out that average salary and then find out what -- >> we need more regulation. >> find out what 31 million divided by the hot dog vendors comes out to and shame this guy into taking less. >> you're the only person that can make an ideological point out of this. >> actually, this is a nice segue, though. i was going to talk a little bit more about m&a, but it's a nice segue. because one of the things alan did yesterday, had a conversation last night all about income inequality. i'm not sure you necessarily have solutions, but you, you

know, you're a reagan republican. >> right. >> and you think it's a real issue. and you heard what joe said -- just tell us how you think about it. >> well, it's a complicated subject. you know, as a recovering research director and economist, i study economics, i can't help myself. and i spend a lot of time on globalization. we have a more global economy than we've had in se more than 100 years. and that's had implications for deflation for credit bubbles. but also occurred to me doing the work that globalization is feeding a global trend of inequality and incomes. as we used to have more of capitalism within each country's borders which we had in post world war ii. there was a balance between return on capital, return on labor. and when we brought billions of new players into this global game, we really have widened the gap and serious significant social implications. and neither side of the aisle is

really thinking about the fact that we're in a new game and we have to think of new ways to deal with it. >> two questions. joe and i debate this all the time. i have suggested not that the american dream is dead but it is much more challenging than ever before. joe disagrees with me and i don't want to speak -- do you think i'm right or wrong. >> i think you're definitely right. a lot of this has to do with our educational system and a lot of other things. there's no question when you look at statistics that the -- the amount of a person's income that is dictated by his parents' income is a rising percentage. and the number of people, the percentage of people that go from the bottom to the top of the income quartiles, we used to be one of the leaders in the free world, we're now behind the uk and other developed countries. >> you made the point yesterday and we made the point on the

show that the bottom live better than they used to. you can have a flat panel tv screen at home and other things but you say that's irrelevant. >> i don't say it's irrelevant. i say again it gets complicated. world traded goods have come down in price and in real terms are more affordable to more people. but the types of things that are delivered as services by highly educated people, higher education, health care and other things have, you know, moved in price well -- >> looks like we've just lost the shot. obviously you can get difficult when you're trying to get things back -- >> no, i think globalization. the reason we were able to offer for years after world war ii that standard of living to people who worked hard was because there was the globalization. we can pay people in other countries $3 an hour is a huge amount of money over this.

you know it's going to migrate that way. it's going to make it harder here. my point is that hopefully in this country we'll get back on track at some point where the opportunity will still be where every -- if you work hard and control your own fate that you can -- it's not just about money, though. >> in my nontv life, i'm a receiver for a school district. i'm in charge of $120 million school district with employees and a lot of wonderful kids whose parents have a median income of about $26,000, a family of four. and they have been denied for decades now what most people in america and certainly a lot of our viewers take for granted, a great education, good education, solid education. and the end result of that is you see higher rate of those kids going to prison. >> how do we fix it? >> and not able to participate in the economy. >> how do we fix it? >> how do we fix it? we're going to give -- we're giving kids great choices and providing a great public education for every single kid

that comes in the door. >> the reason that i take issue with it. having lived through the late '70s, i had the same feeling coming out of college back then that the american dream was in trouble for me back then. and you remember what it was like then with 15% mortgage rates and, you know, looked like it was never going to be like this again. and i guess i want to be optimistic it's always morning in america, we got the system here that's going to allow -- if anyone can -- can have a society where there's, you know, equal opportunity and not egalitarian outcome, it's here and that's what frustrating -- i want to do what we can to get back to where we were. and tre cusp of another era where we can do that again if we get our act together. >> number one, it was difficult for you, but you made it. two, i think that, you know, in the 1970s, we ran into a problem. we changed a number of the rules

of the game. we made dramatic changes in the world's economic system. we changed currency controls, we changed the gulf standard, tariffs. we did a lot of things to reflect the structural imbalances. i don't see those conversations going on now. you are right, we need to get back there. but sometimes the way you've played the game for the last 20 or 30 years is not working anymore and there needs to be a conversation about that. >> okay. thank you, very, very much. live from nantucket. we'll come back with a couple more conversations. but in the meantime, we'll send it back to both of you, joe and becky. >> doesn't change what's going to happen to the dodgers. >> dodgers are going to win. they're going all the way. >> might be my second favorite team after the reds. anyway, coming up, avoiding that next crash. and we don't mean in the markets. phil lebeau is on the road in virginia. hey, phil. >> reporter: hey, joe, we're at

the insurance institute for highway safety on the crash test lab where they're going to be showing us in a little bit how you prevent rear end crashes and which systems do the best. you do not want to miss the results coming up when "squawk box" returns. [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account.

welcome back to "squawk box," everyone. the futures this morning have been under a little bit of pressure and continue there. right now, the dow futures down by about 40 points, s&p down by about 6 1/2. in our headlines, carlisle agreeing to make a minority investment. the terms of the transactions weren't disclosed. also announcing it has entered into an agreement to reacquire the minority stake held by htc. htc will no longer have any ownership stake. and the share of lumber liquidators, the headquarters ser searched by the fed after a warrant was executed. no word if this is related to a particular person or the company as a whole and that stock down by just over 6%. wow, maybe we need to clarify that. >> yeah, i need to understand what's going on there. let's get to phil, although i want to let bob shrum

criticize -- you're ready to do that. >> the other thing that's going to open up, i think, new opportunities in america is the explosion of energy in the u.s. not because of the jobs the extraction creates but because we're going to have so much supply it's going to make it attract for manufacturing to come back here. >> that is a great point. people are saying where are those jobs? >> i heard in my ear, the producer just moaned because we've got to get to phil. will you return? >> go to phil. >> this is really -- it was a real -- it was not a fake moan. new results -- >> so you think. >> new results -- i'm not even going to touch that. which vehicles are making the grade when it comes to crash avoidance. let's get to phil lebeau with the results. >> reporter: hey, joe, this is all about preventing rear end collisions. they've been measuring the collision avoidance issues we've

been seeing in more and more models. why is this important? think about this, nearly 1 out of every 3 accidents in the united states is a rear end collision. and those collisions have taken a heavy toll. the most recent statistics from the department of transportation in 2011, there were 1.7 million rear end collisions, 32% of all police reported crashes, 6% of the fatal crashes and 31% of the injury crashes. so the iihs has devised a system of measuring by quickly alerting drivers and, two if there's an auto-brake feature, how quickly do the brakes kick in to prevent the car from hitting the back of another vehicle? well, seven models were given a superior rating. subaru legacy, subaru outback, followed by the cadillac ats, srx and three others, the mercedes benz c class followed

by the volvo s60 and the xc60. all collision avoidance systems are effective to some degree in alerting drivers. the question is, how effective are these systems in actually preventing an accident. in that case, the subaru outback as well as a legacy were the only two tested that prevented the car from hitting the vehicle in front of it. interesting data, guys, we're going to be here all day long, we'll show you later today how some of these crash tests are conducted. and you really want to see what these statistics and what the findings are. we're going to see these types of systems in more and more models. guys, back to you. >> it's great stuff. this is the type of thing we've been waiting for. you were here yesterday, we talked a little bit about the driverless cars. this is like the reality we're seeing right now. that's a really great thing. >> i'm going to take up driving again. i gave it up years ago because i used to send the rear end into the car in front of me.

i guess i can drive. >> join the rest of us. >> i like phil's uniform today. you look like the guy from dirty jobs selling a ford or something, phil. you look really -- you know what i mean? and i dare say you look pretty good in them jeans. >> i thought i would, you know, dress a little more appropriately. >> you look pretty good in them jeans. >> i don't think a suit and tie cuts it -- >> that would be bad. >> looks good. >> you are a road warrior, phil, thank you. we'll see you a little later. >> traveling around. >> he has been. it is friday and that means the talking "squawk" blog is up and running. check it out and share it with your friends right now. we're coming back with breaking economic news and more from the nantucket project. stick around, "squawk box" will be right back. [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship.

now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.

welcome back to "squawk box" here in nantucket. we're live at the nantucket project where business leaders and all sorts of folks are here. we're actually at the white elephant. this is the backside of the white elephant looking into the harbor here. great story about the white elephant, by the way, they've been very nice to us here. the woman who bought this property originally spent all of her money -- they told her this whole place was a white elephant, that's what they called it. we actually have a studio audience. we never have a studio audience. this is like a mini "today"

show. where do you work? >> u.s. trust. >> where everybody else here work? >> u.s. trust. >> everybody here is u.s. trust? >> no, you're a former citigroup guy, right? we were talking about the most interesting thing that happened yesterday. and i don't know if you were the one that came up with it, what did you hear yesterday? >> david rubenstein's humility on the fact he turned down meeting zuckerberg at facebook. >> by the way, great story, guys. david rubenstein, was it his son or daughter was at exitor and his roommate was the one and only mark zuckerberg and said i want $10 million, that of course, will be worth $9 billion and then admits another guy named jeff bezos had come to him and he said no to that too. two investments that didn't really work out that you probably should've done that. >> seems to have done pretty well without those two investments. >> right. anyway, this is my effort at being donahue. i'm going to send it back to you

in the studio. we have a lot more coming up. ted leonsis will back at 9:40 a.m. here in nantucket. >> you're like the "today" show. you're like the "today" show. >> we're trying. i mean, this is our "today" show audience right here. >> that's what i mean. >> we have, one, two, three, four, five, six, seven. >> correct me if i'm wrong, isn't children's beach right there next to -- >> children's beach is right -- actually, it is. right over here. >> right over there. >> you are correct. children's beach is right over there. >> it's a great spot. >> it's cool to be out here. >> it's a great spot. >> all you guys come out next time. we'll do it next year. >> thanks, andrew. coming up, more breaking economic news. rick santelli live from the trading pits of chicago and we'll check back with andrew and nantucket. as we head to break, a look at u.s. equity futures. ♪ [ bell ringing, applause ] five tech stocks with more than a 10%...

change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. [ agent smith ] i've found software that intrigues me.

it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

welcome back to "squawk box." moments away from income and spending for august, up .4 on income, up .3 on spending. pretty much in line with expectations. not bad numbers.

and last month, released at .1 on both was upgraded to .2 on both. let's hook a little deflator action. month over month, expecting up .1, that's what we received, year-over-year, 1.2, everything pretty much matches perfectly what we were looking for. the response to the marketplace, not much. we are down on the equities, global equities are pretty much taken a hit today. interest rates, slightly lower than yesterday. still hovering in the zone that would represent about 6 1/2 week low yield. we're roughly sitting 36 basis points off the 299 high yield close that we experience several weeks ago. and seems as though a good thing for your currency these days is raising taxes. means there's probably going to be a lot of powerful currency trading lately. japanese, of course, are who i'm referred to. we'll continue to monitor the slide of the dollar against the

yen and also the big drop that they've had testing 1%, not that long ago on a ten-year jgb. guys, back to you. >> yeah. cancel my trip to europe. 1.355. what do you see, steve? >> i want to double check. hey, rick, you got an upward revision to july on spending on consumption, is that right? >> yeah, .1 to .2, income and spending, yes, sir. >> that's going to help a little bit on the third quarter gdp that we're doing. not a whole lot, but these numbers are decent. some of the better gains we've seen. also like seeing wages and salaries going up. a reminder that they fell .3 of a point. we've been picking up in other data that you do have the job growth but not the wage growth. if you don't have the wage growth, people aren't going to be spending a whole lot. guys, you've been following all of this fed speak this morning.

i know you've been talking about charlie evans. >> yeah. who else? >> what did you read those headlines? he was all over the place, right? he was -- i'm going to taper -- i could taper this year. >> he basically said we could either taper this year or next year. >> can i ask a question? because you guys are experts in this. >> that's awesome. >> why doesn't the market take seriously when bernanke says we're going to taper at some point but it's all going to depend on the economic data and then you have some outliers against qe-2 at all. especially some of the nonvoting people, we should taper now. and everybody tremendously overreacts to this. i think they're going to look at the numbers -- >> because when they first announced it. it was so earth shattering of the idea of doing $85 billion a month. most people thought even if you had decent economic numbers, you'd try to get out as quickly as you could. you wouldn't micromanage, make

it dependent on every single job we create again is because of $85 billion. >> didn't they set a benchmark target? >> no, not for qe, that's for raising rates. for qe, no benchmark for unemployment. >> there's supposed to be a relationship between the market and the fed. that's how monetary policy is supposed to work. >> supposed to be. >> and don't worry, rick, i'll give you ample time to respond to this. >> we need to go to divorce court. >> think of your great metaphors, let me explain real quick. what markets are supposed to do is listen to the fed. and the fed provides what they call a reaction function. and it says when stuff comes in, when we get data information, here's how i'm going to react to the data. up until a minute before bernanke spoke at the june meeting, i thought and i think the market thought they understood the reaction function. bernanke gets up there and goes, hey, you know what, we have this whole plan now to taper. and it's going to happen this way. and i thought they were in the

zone of what -- which was unlimited until we get employment gains. well, guess what, they changed that in june and said you know what, it's limited here and there. then they come back in september. so the markets confuse the connection between the market and the fed which can be really -- here's the perfect connection between the market and the fed. when the fed makes an announcement and the market doesn't move then the reaction function is set at zero. because the market perfectly anticipated and read the data coming in. i would say the volatility around the reaction function today, around fed meetings is much higher than it's been in a while. i think the market's confusing. i think when i hear joe read the headlines, i think some of these guys at the fed are all over the place. they keep trying to say here's the rule. and what i documented was an increase in the length of the statement that comes out. a greenspan statement was typically 150 words. we have gone up 400 words in

2011, 600 words in 2012. the new statement is 720 words. and there are statements that modify statements that modify statements. did you ever try to write a story or an article or a piece and it never worked and you kept adding stuff and adding stuff and it kept getting worse and worse and worse? that's what my opinion is going on with the fed. i think they need to go back to principles and simplify this whole thing. >> you don't think bernanke saved the economy when we had fiscal gridlock? >> i do. but my point is he's got to stray somehow in either controlling the committee or running the committee. and i think his first objective is to run the committee. and i think what's happened as a result of trying to run the committee is communication with the market. >> too many people talking too much. >> no, i don't think it's too much talking. first of all, i think that things are uncertain right now. he strayed from his plan. and i know rick disagrees with the plan. but i think he might agree if

you're going to have a plan, stick to it because then the market can trade and rely on it. >> what about -- hey, bob, if the republicans hadn't been obstructing and causing the fiscal gridlock, how would the democrats have saved the economy without bernanke? no, i mean, what would you have done? >> another stimulus plan? >> there should have been a bigger stimulus, there should have been serious infrastructure investment. in fact, there was a bipartisan bill that john kerry and kay bailey hutchinson. we could debate this endlessly. my point is -- >> 800 billion -- you think it was well spent? >> appointed by george bush, a republican, has done a superb job while the economy was in deep trouble. >> we kept rates at zero, then we said we were going to keep them at zero forever, then we said we were going to do qe-1, then qe-2, then qe-3, then qe infinity. most people will grant you that some of it was important. even rick. rick, would you grant?

maybe keeping rates at zero for a long -- maybe that was important or positive, rick. >> i like the commercial paper market. i like what the fed did on commercial paper. i liked what sheila bair did on guaranteeing deposits and i think that pretty much would have been enough. maybe what we could've done is set up soup kitchens when all the banks failed and set up classes for the new regional banks that would've taken over. but now we have eric holder, basically, you know, in charge -- you have ben bernanke and mr. evans in charge of what the federal reserve will do. and we are now, you know, once again just with health care. one of the defenses for obama care. well, the united states is the only country in the world that doesn't have socialized medicine. yeah, the united states of america used to be the only country in the world with personal liberty and success. see where that's gone. >> all right. >> but then the canadians are all oppressed because they have

socialized medicine. going back to soup kitchens, it would not be something -- no political party is -- >> rick is saying we did have the best medical system -- the best health care -- >> he's talking about soup kitchens. >> he's joking around for the bankers. >> here's something i don't get about health care. one thing -- when i talk to executives, they don't want to do this anymore. there's a reason why companies began to -- began to provide health care. they want out. >> you see where they're going -- >> why isn't the republican party on board with helping the companies get rid of this burden. >> they're all going to the private exchanges, that's fine. >> that's fine. >> they're okay with the private exchanges. >> republican party, democratic party, the only party i like was the entrepreneurial party. >> yeah. yep. >> let's do this another day. >> and the lights have gone out and it's 1:00 a.m. in that party. >> in the republican party, you're right. >> no, the entrepreneurial party. >> no, the republican party is

shredded and falling apart and everybody denouncing everybody else. >> the executives i talked to -- >> we want to -- they're going to say -- >> even if it doesn't happen. >> those saying -- >> not going to be defunded, not going to be defunded, not going to be delayed, going to go into effect. going to go into effect and then what's going to happen is just as with medicare where people were reluctant to join at the beginning, people are going to like it and by 2020, the candidate is going to say he wants to strengthen and improve health care, he won't say obama care. >> i think the president's the one that needs to bring people together to talk about and fix it because it's broken. >> it isn't broken. it isn't even in effect yet. >> the front page of the "wall street journal" says health rollout. >> you know what that hitch is, they're delaying by one month the small business capacity to use computers to sign up the sh. >> what -- >> changes aren't ready either. >> this is going to happen and

we'll see how it works out. i thought the president was powerful yesterday when he said if republicans think this is going to be a big failure, why are they playing this game? stand aside -- >> the president gives a great speech. he's an effective speech iive needs to be talking to republicans as well as democrats. >> who? >> the administration's done a terrible job explaining this law to people. >> i agree. >> that the people most likely to benefit from this program is among those who hate it the most. >> thanks, rick, thanks, steve. and everybody else. >> stick around for a while. let's take a look at lumber liquidators. i want to give you more detail on this. we had told you that federal authorities today -- on thursday executed a search warrant at the virginia headquarters of hardwood flooring retailer lumber liquidators. that stock down by about 10.5% at this point. we don't know a lot about it. but what i can tell you is it

was served in coordination with the u.s. fish and wildlife service and the department of justice. the warrant is sealed but a spokesman in a statement the company said that it's cooperating. about documentation answering questions related to it will importation of certain products. that's what we know at this point. >> it does sound like the fender thing. >> and the department of justice -- >> for making -- >> because they were a nonunion shop. >> whatever the reason, the pretense was. >> yeah. this is a hardwood flooring retailer, you might be able to put two and two together with that. that stock down 10.8% right now. also, we haven't talked about blackberry in a little bit. blackberry came out this morning with earnings it was just a loss of 47 cents in line with the company had previously warned. but the gross margins of the company, negative 23.8%. they're losing money on everything they're doing. cash and investments at $2.6 billion. and if you take a look at shares

of jc penney quickly, that company said they're going to be pricing $84 million shares at $9.65. we briefly saw shares below $9.65, it's right back at 9.67, which is what you might expect. also a couple of headlines, saying it had constructive talks with iran. they said they'll have more talks on october 28th. and as those headlines were coming out, i took a look at wti fell below $103, $102.99, we'll be watching those talks closely. right now, andrew, back to you. >> one last thing for bob. someone just said -- when the gop has differences of opinions on taxes, the party is shredded. when the dems disagree, they have a -- >> look, this is being said by republicans and republican strategists. i've never seen a party where there is less capacity to get them together and move. i mean, i feel sorry for john boehner, something i thought i'd never say. the tea party caucus and that's how they rode to power in 2010

is not giving him the room to move -- >> nobody's talking. >> i do feel sorry for all of us because i think this could hurt the economy. >> do you see how skinny he is? >> he looked great. looked great the last time he came in. >> he looks amazing. >> he's on a physical fitness kick or something. >> that's a nice tease. when we return, ted leonsis will be back. and whether or not washington, d.c. may get the olympics in 2024. we're coming back live from nantucket after the break. ♪ nascar is ab.out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar

win with our fans.

with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

the political leaders do not believe that too big to fail has been eradicated. and i think in many ways, they do not believe too big to fail can be eradicated. i think the single most important thing if we're going to, you know, if we're able to say no taxpayer money again is to have an effective, rigorously tested resolution recovery plan that's accepted by the major governments around the world. >> that was former barclays ceo bob diamond speaking from nantucket, also the co-founder of the nantucket project. and that's where andrew is this morning. andrew, you've got someone else lined up. >> ted leonsis is back. we talked about mobile before with ted. and now i want to talk a little bit about sports. you own the wizards, the

capitals. but i want to talk a little tech and i want to talk tech and sports at the same time. and it's a question that we've asked on the show a lot. roger goodell was here two weeks ago, we talked to him about this a few weeks ago. when do you see a time when sports rights are sold not to the networks like nbc and cbs and abc but are sold to netflix and google and hulu and you name it. >> i think apple would be a bidder too. and i think you're going to see that soon. i think that the reach that they have and streaming now the high quality hd streaming and the business models that these companies have. i think they're going to be competing with cable. >> for big packages, the whole package, in terms of volume, you still need lots of people to watch -- there's a place for network still. you know, when you think about the super bowl. you want it to be watched by a lot of people. the sponsors need it to be watched by a lot of people. more like the sunday ticket kind of thing? >> no, i think the cable model

will be under a lot of stress and demand and sports programming will be increasing in value because it's really the only programming that brings large audiences together. and it's what consumers will pay for. >> and you think that tech companies will ultimately truly get into the content game. right now, google has been content agnostic. you could argue that apple has been content agnostic, even though they've created a platform for it. >> i think youtube is next generation cable mso, netflix, think it's people think it's a cable killer. it's not. i think things are changing. but if you're an owner of content, you're going to be well-positioned, especially sports content. >> i have another sports question for you, it's a hockey question given your ownership of the capitals. and it relates to football. there's been a lot of injuries in football. the concussion settlement.

what's going on in hockey? should hockey be looking for a settlement like that? some kind of arrangements with the players? >> well, players are the most important asset and we have to take care of the players and i'm really proud of what the league has done. we really have been leading the research to make sure that the protocols are in place and that the helmets and the technology -- hockey's a dangerous sport. >> it's a violent game. should we accept these are dangerous games or is there more to be done? >> no, there's more to be done. we're making the appropriate amount of investment. and we have to protect the players. >> okay. another sports question, washington, d.c., you guys are bidding for the olympics, 2024. what are the chances? >> it's likeolympics, 2024. what are the chances? >> it seems like a long time from now. >> you got to get started early. >> alex ovechkin, he's the face of sochi, the winter olympics. we have a pregame tonight. he's jumping on the plane.

he'll be the first russian to go to greece and light the flame and carry the torch. so the olympics are really, really important. your parent company, it's a pivotal moment for them. >> do you think they're ultimately good for cities though? when you look at all of the cities that have bid for this before, it's not a financial slam dunk, it can go the opposite way. >> i think it was good for l.a., i think it will be good for d.c. we'll go out, give it a fair shot. i think bringing the games to washington, d.c. will be good business and be really, really great for the country and economy. >> i'm fascinated by a little business you just started or invested in called upturo. just tell us what it is. >> the logistics business for companies -- >> what is the reverse logistics

business? >> returns. 10% of all products in retail come back in returns. it's really the last part of the evalue commerce chain, a little company called optruro, saft wear, being able to create a marketplace and get money back to retailers. >> so you give them the money back for the clothes back or whatever the return is. >> yes. >> have fun on the nantucket project. it's a great time, great event. >> really appreciate you being with us this morning. >> guys, back to you on hg. >> andrew, content, that's going to be worth so much. >> content is king. >> there's going to be a bidding war. think if everyone got involved. what is an nfl game going to be worth someday or "squawk box." what is it going to be worth? >> it's going to be worth a lot. and ted leonsis says it's going

to be worth more, right? >> that's the plan. >> if they possibly can, it would be an idea i would put forth. don't you think? >> it's a good idea. given our owners. >> i wasn't even thinking about them. all right, thank you. we got to go. >> when we come back, we'll get the last roll call from our guest host. and, by the way, on monday we have steve case and dan gilbert talking about the the government shutdown and the debt ceiling and what happens when an activist comes knocking at your door. that's monday on "squawk." of go, they could use a home equity loan to renovate their yard and have a beautiful wedding right here while possibly increasing the value of their home. you and roger could get married in our backyard. it's robert, dad. [ female announcer ] come in to find the right credit options for your needs. because when people talk,

great things happen.

welcome back to "squawk box." a couple of stocks to watch this morning. nike posting better-than-expected earnings. revenues match expectations. the newly minute dow component enjoying big sales in north america and europe and benefiting from fewer markdowns up big today. next we'll have the last word with our guest host and the talking squawk blog is up and running. check it out and share it with your friends right now.

you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ with my united mileageplus explorer card. i've saved $75 in checked bag fees.

[ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪ let's get back to our guest host for the last word. i'll ask you 20 seconds each what happens when it cops to the debt ceiling and the government? >> i don't think we know.

i think boehner would like to make a deal. the think the president's not going to bargain over the debt ceiling. i think we could have a shutdown. after the 20-day shutdown under clinton, which caused huge economic and political fallout, republicans don't want to -- >> but had a bunch under reagan. >> but -- >> we had two under clinton. those were partial, by the way. >> but the president has to lead the discussion. he needs to be in the middle of this talking to everybody. >> he is. but he's not going to bargain on the debt ceiling and he shouldn't. >> why do you say he's talking to everybody? >> i think they're talking all the time. >> you read in the papers that there are no talks going on sometimes. >> but they're talking to republicans all the time. >> happy birthday to your kids. >> happy birthday. >> see you guys on monday. >> make sure you join us. "squawk on the street"'s next!

♪ there it is, whoop, there it is ♪ all right, good friday morning. welcome to "squawk on the street." aim carl quintanilla with kelly evans and david faber. jim cramer is off today. the fiscal show down continues today. the s&p did